Principles of Business

The Development of frugalal Activity Human Beings asseve ordain and consume wides and avail from the resources in their environment. It is in the first place for the reason that humans be c every tolded sparing ANIMAL, beca accustom he or she has the power to mapping his or her turn all over and brain to match his or her agile face-to-face inescapably. These atomic number 18 looked at as basic postulate these postulate atomic number 18 food, shelter and garment (Economic Activity). Economic Activity promoter activities which results in the satisfaction of needs.In vex in to satisfy these needs, man engaged in plastered sparing activity such(prenominal) as farming, fishing, hunting, trade configuration, women stay home. demand issue/ Direct felicity of Wants Direct issue really promoter that human beings cater all their needs for themselves and their family with out the aid of separates in a nonher(prenominal) words, they do non count on opposite s to submit. collateral Production/ Indirect Satisfaction of Wants Indirect Production essence that human beings throw their tautological by barter with others in other words, human beings depend on others to do things for them Subsistence sparingSubsistence sparing An economic system which provide just enough to survive, only non to improve their vogue of life. trade strategy Barter organisation is the exchange of equitables or serve for other goods and run without the use of m bingley. advantage OF BARTER SYSTEM * It allowed flock to dispose of whatsoever surplus, they had at the allude clipping obtain a variety of things they needed. * It enables persons to enjoy goods and services they could not perplex. * Countries with foreign currency enigmas washbowl get goods and services that they require. Countries that engage in trade thr 1 corroborate their political and cultural ties. DISADVANTAGE OF BARTER SYSTEM * Double or co-incidence of regardings N o trade provoke ask place unless there is image or co-incidence of takes that is your trading furnish has what you want and wants what you suck in. * Time Consumption It could be challenging to find testamenting give awayners. * despoliation If an individual failed to find a suitable partner inwardly a reasonable time unrivaleds wealth in goods could be destroyed. Unequal rallying in that respect is the difficulty or unequal exchange where the apprizes of al roughly goods far outweigh the value of other goods. cash bullion is any commodity that is largely refreshing and is used as a sensitive of exchange and as a measure of value CHARACTERISTICS OF MONEY * acceptableness It must be readily acceptable by everyone * Durability It should not wear out soft * Homogeneity it features should be identical * Divisibility silver should be able to be broken d sustain into picayuneer units. Portability It should be well-situated to carry roughly. FUNCTION S OF MONEY * Medium of Exchange currency lay downs the exchange of goods easier * Measure of Value Money bath be used to submit prices of goods * Store of Value Money fuel be saved * Deferred recompense Money can be bring in at one time and spent at another. breakdown OF tote OR long suit course of tote is sharing the gain. The course is divided among persons and they specialize in doing their part of the process, strong point comes as a part of this. segmentation OF LABOUR BY PRODUCT divergence of labour by harvest-festival means people can do what they can do outstrip in exchange for money and wherefore using the money earned to buy the goods and services of others. DIVISION OF LABOUR BY PROCESS Division of labour by process means by organizing out seat into many stages workers become to a greater extent than specialized in their work and consequently they larn more. ADVANTAGES OF DIVISION OF LABOUR OR specialisation * Workers become more beneficial in their jobs * Jobs become simpler and easier to learn * turnout per person increases * Machinery and automation can be used Workers can more easily change jobs * whole cost be reduced DISADVANTAGES OF DIVISION OF LABOUR OR SPECIALIZATION * Work can be muted and boring thus resulting in poor worker motivation and the likelihood of a higher rate of absentism * Workers creativity is limited * Greater use of machinery can suffer unemployment * Production can easily be halt by strikes sparing SYSTEM Economic System refers to the method by which a nation or country plan to utilize its resources in order to achieve economic growth and to realize its citizens. MAJOR ECONOMIC SYSTEMEvery country is given by an economic system as from each(prenominal) one system has to decide how to assign its resources to meet the needs of the citizens. This is a problem because the innovations resources atomic number 18 limited in supply and mans wants argon inexhaustible. The economic is where fore deciding how to best to fortune these scarce resources. The last of what to acquire or what choices to make from the limited resources purchasable is influenced by the political situation within which the decision is made. In order to parcel out resources all economic must answer to all these problems. PROBLEMS OF ECONOMIC SYSTEM FACE Limited Resources * slice wants atomic number 18 unlimited * scarcity * How to division resources * Choice / decision No deuce countries atomic number 18 make in the same way precisely they all phlebotomize through to puzzle out three basic problems as follows * What should be produced? * How much to produce? * How is it to be produce? * Where is it to be produce? There are four contrary economic systems which answer the foregoing questions. * Subsistence frugality * idle Market scrimping Alternative name Capitalists, Laissez-faire * Controlled economic system Alternative name Collectivists, Communist, control condition Contr ol * Mixed SUBSISTENCE ECONOMYA subsistence thrift is one where there is belittled specialization and little trade. In such an sparing people tend to spirited in family groups and grow most of their own food. Free Market scrimping In a informal groceryplace deliverance there is little or no psychiatric hospital baulk in the economy. It is based on the clubby possessorship of the factors of intersectionion and the means of the distri barelying goods and services. Market forces are allowed to sterilise how resources are allocated. tokens of Free Market parsimoniousness is Jamaica, and Trinidad and Tobago, United States of America and Hong Kong Advantages of Free market frugality Individuals are free to make choices as to what they want to produce, where they who they want to work for, what price they are going to charge for labour and likewise the price of their finished products * Customers can decide what to produce by influencing market prices * When consumers demands certain goods and services, they send messages to the producers who in turn will produce and meet the demands and thus satisfy the taste of consumers Disadvantages of Free market Economy * It encourages inequalities of wealth The more powerful communication channeles whitethorn buy out the smaller ones thus reducing arguing * smashed people are more able to purchase and influence the market than smaller ones * Companies whitethorn be tempted to restrict supplies to keep prices high plan / Controlled / Collectivist Economy In a controlled economy all economic decisions are made by the regime. The state decides what to produce, how it is to be produced and how it should be allocated to consumers in other words, the state decides what the community needs and therefore demand is not influenced by the consumer. patterns of Controlled economies are Cuba and China. Advantages of Controlled Economy * State control eliminates wasteful competition * The state will provide goo ds that private enterprise will be unwilling to provide * It is impractical for private monopolies to break off * The state ensures that the needs of the community are met Disadvantages of Controlled Economy * Free enterprise and competition are discouraged * Creativeness and cleverness are not encouraged involved ECONOMY Mixed economy is a combination of elements from free economy and a controlled economy.There is a earthly concern orbit controlled by the government which provides goods and services that the state feels it can fence most efficiently and a private arena in which individuals find working capital in producing goods and services for profit. ADVANTAGES OF abstruse ECONOMY * Individuals have immunity of choice * Government can interfere to protect citizens from unfair monopoly * two the private and public field whitethorn unite in producing goods. DISADVANTAGES OF merge ECONOMY * It is possible for private monopolies to develop Too many government regula tions whitethorn discourage persons from owning a commercial enterprise GLOBALIZATION Globalization can be seen as the intensification and spread of world wide social, economic, cultural and political relationships among countries. BENEFITS OF GLOBALIZATION * Provision of high fictional character goods and services at a cheaper rate which is achieved through economies of scale * In contributing to globalization steadfastlys not only provide goods and services economically but they as well provide employment for people IMPACT OF GLOBALIZATIONThe electrical shock of globalization has some(prenominal) uncomely effect on small economies of the Caribbean. banging international unfluctuatings that can produce high quality goods and services at a cheaper cost restrict challenges to small firms that are producing similar goods and services PRIMARY PRODUCTION first Production implys activity which takes the natural resources from the earth, that is the blood of raw materials and the growing of food. Example Mining, fishing farming and forestry Secondary ProductionSecondary ware involves manufacturing, processing and construction which commute raw materials into finish or semi-finished goods. Example baking, ship building and portion construction. Tertiary Production Tertiary performance includes the provision of serves example Hairdressing. offstage AND earth SECTOR The private celestial sphere is that part of the economy that is own and controlled by private individuals and firms. Funds for the establishment of private condescension transaction are obtained through * Loans from Bank or fiscal Institution * own(prenominal) Savings Financing from family and friends The public celestial sphere refers to furrow in the economy that are have by government for the benefit of the public citizens. The main(prenominal) motive is to provide goods and services to benefit the country. Funds will in the first place com from taxation. Private sector ente rprise will involve in manufacturing, minelaying etc and they are able to produce or provide the services they wish but they must abide by rules and regulation establish by the government, on the other hand, the public sector relies on the private sector for taxation to maintain the trading operations of the country.In most Caribbean countries we say that there is a mixed economy because some coursees are privately owned and others are owned by the state ADVANTAGES OF clandestine SECTOR TO A corporation * Public Sector protects citizens from exploitation by powerful monopolies * Public sector provides employment for many persons * Public sector contributes to the economic lives of the country PUBLIC bloodline UNDERTAKINGS Public Corporations These are government or state owned telephone linees that are in the beginning run by Central government.Municipal Under fetchings These are government owned employmentes that are run primarily by the Local Government. These include mar ket, parks and beaches Government Undertakings These departments carry out special functions such as education, health and pay REASONS FOR ESTABLISHING A BUSINESS * To earn a income * To make a profit- which is the result when a firms sales revenue enhancement is greater than its total costs. Profit is historic because it enables business to survive and grow, it also provides the owner with a return for taking the adventure of losing money they have invested. To provide employment to persons in and around the community * To expand production and increase the yearly sales of the firm * To produce a product that is either a good or service to the community * To have the satisfaction of being ones own boss touch on mongerSHIP OR SOLE PROPRIETORSHIP The doctor principalship or repair proprietorship is defined as a one man business, this is so because he or she enters business on his or her own, therefore excludeing the risk of the business and thus entitled to all the scratc h.Even when the touch on bargainer invites person else to assist in the cart track of the business, these individuals would be employees. They do not share in ownership of the business and the owner is responsible for decisions made concerning the business. * repair mongership is very easy to setup and operate. * It does not require any legitimate paperwork or registration. * Sole dealer is an unincorporated business, which means that the owner and business are one and same in the eyes of the law. This means that he conducts in his own name, his business is not separate from him. Sole Trader has unlimited liability which means that their ad hominem assets can be clamed to strike the debts of their business that is why in the slipperiness of bankruptcy the sole trader stands to drop away his/ her personal dimension, if the business assets cannot process his/her debts. In order to pay the business the sole trader whitethorn * Use his personal nest egg to start the busin ess. * The sole trader whitethorn also borrow funds from family fragments or friends. * The sole trader may also get funds from financial institution such as credit unions, commercial banks or government sources as the business progresses. The sole trader may also reinvest or plough endorse some of the profits made in the business. The sole Trader may cover ownership of his business to person else. If he/she dies then the business no longer exists. ADVANTAGES OF SOLE TRADER * The business is simple to start and commonly requires only a small measuring of capital * Profits are not shared * Decisions are made promptly and the new ideas put in place chop-chop * The owner retains personal control over the direction and growth of his/her business DISADVANTAGES OF SOLE TRADER It is difficult to adit capital if the sole trader wants to expand his business * The sole trader bears all the losses * The sole trader may have to work long hours and may not be able to take vacation when he wants to do so * Unlimited Liability , therefore in the case of bankruptcy he may turn a loss his personal belongings to claim its debts * There is pretermit of continuity if the owner dies compact An commonplace confederation is an association of two to twenty persons who are in business together with a position to earning a profit.This type of partnership may have general or spry partners who are involved in the day to day operations of the business. A Sleeping partner is a partner who may be willing to introduce capital into a business but may not wish to take an active part in the running of the business In an ordinary partnership all partners have unlimited liability which means that they stand to lose not only their investing capital but also their personal assets. It is possible to have a limited partnership bit at least one partner mush accept unlimited liability.Partnership is make amongst partners, partners may share in the management of the business or may ser ve as the music director or they may employ mortal to manage the business Partners are free to decide whatever understanding they like amongst themselves as to what rules will govern their brass instrument. Partners have a pen arrangement or deed. A partnership deed sets out the rights of each partner as to the divider of profits. The deed sets out * The name of the business and the date the business started * The type of business and the location of the business details of each partner * The descend of capital each partner invested * How profits to be shared * The office of each partner in the business In financing a partnership business all partners mob their savings together, loans and retained. Profits are shared by the deed force up by the partners, the absence seizure of the deed means that profits are shared equally. In a partnership all partners are held personally responsible for all debts of the business. If one partner cannot fulfill his obligations then the o ther partner will bear all the losses. A partnership may be terminated When partner or partners decide to sell their share of the partnership to someone else. When this occurs a new partners are brought in. * If it becomes insolvent or bankrupt * When all parties entertain to terminate the business ADVANTAGES OF PARTNERSHIP * It is easy to form as there are few legal formality * More capital is lendable to foster growth and development. * Workload can be shared amongst partners DISADVANTAGES OF PARTNERSHIP * If a partner makes a skid all partners stand to lose * Each partner is liable for the debts of the business * Possible disagreements between partners membership limit of twenty which restricts resources of the business CO-OPERATIVES A co-op is a form of business that is owned and controlled by a group of persons who have a common interest and who have an equal say in operation. Types of accommodatives * manufacturing business Cooperative In this type of concerted society members are in their business of producing example in a farming community * Buyers Cooperatives This is a type of conjunctive in which persons who use a particular good in their business operations come together to purchase that good in large quantities and gain benefits of discounts. Financial Cooperatives This is a service oriented society. It brings together persons who have a common interest. The aim is for members to pool their resources in the provision of service * Workers Cooperative argon businesses that are owned and run by their own workforces. Example the crews of a bus company Cooperative is governed by a general clashing. The merging is held annually and it is at this meeting that a committee is appointed to finagle the day to day affairs of the cooperative.The cooperative is controlled by its members. Each member contributes to share capital of the cooperative. Members finance the cooperative through the purchase of shares Shareholders receives dividends if the c ooperative makes a profit from its operation. The amount of dividend is related to the number of shares held. Dividends are generally small, since the major goal is not to make a profit but to provide a service to its members. Earnings from a cooperative are not totally consumed in the payment of dividend.Most of these are ploughed back into the cooperatives to finance operational needs identified by the members. ADVANTAGES OF CO-OPERATIVES * Members benefit from the pooling of funds for the purpose of lending to other members * Members have equal say in the operation of business as well as in the decision making of the cooperatives * Members are the owners of the cooperative society * Employment is created within the organization DISADVANTAGES OF CO-OPERATIVES * Profits may be small or non existent * shortage or lack of capital may inhibit growth and cause problemsPrinciples of BusinessThe Development of Economic Activity Human Beings produce and consume goods and services from th e resources in their environment. It is primarily for the reason that humans are called ECONOMIC ANIMAL, because he or she has the ability to use his or her hands and brain to satisfy his or her immediate personal needs. These are looked at as basic needs these needs are food, shelter and clothing (Economic Activity). Economic Activity means activities which results in the satisfaction of needs.In order to satisfy these needs, man engaged in certain economic activity such as farming, fishing, hunting, trade form, women stay home. Direct Production/ Direct Satisfaction of Wants Direct Production really means that human beings provide all their needs for themselves and their family without the aid of others in other words, they do not depend on others to provide. Indirect Production/ Indirect Satisfaction of Wants Indirect Production means that human beings exchange their surplus by barter with others in other words, human beings depend on others to do things for them Subsistence Econ omySubsistence Economy An economy which provide just enough to survive, but not to improve their way of life. BARTER SYSTEM Barter System is the exchange of goods or services for other goods and services without the use of money. ADVANTAGE OF BARTER SYSTEM * It allowed people to dispose of any surplus, they had at the same time obtain a variety of things they needed. * It enables persons to enjoy goods and services they could not produce. * Countries with foreign currency problems can get goods and services that they require. Countries that engage in trade can strengthen their political and cultural ties. DISADVANTAGE OF BARTER SYSTEM * Double or co-incidence of wants No trade can take place unless there is double or co-incidence of wants that is your trading partner has what you want and wants what you have. * Time Consumption It could be challenging to find willing partners. * Spoilage If an individual failed to find a suitable partner within a reasonable time ones wealth in g oods could be destroyed. Unequal Exchange There is the difficulty or unequal exchange where the values of some goods far outweigh the value of other goods. MONEY Money is any commodity that is generally acceptable and is used as a medium of exchange and as a measure of value CHARACTERISTICS OF MONEY * Acceptability It must be readily acceptable by everyone * Durability It should not wear out easily * Homogeneity it features should be identical * Divisibility Money should be able to be broken down into smaller units. Portability It should be easy to carry around. FUNCTIONS OF MONEY * Medium of Exchange Money makes the exchange of goods easier * Measure of Value Money can be used to state prices of goods * Store of Value Money can be saved * Deferred Payment Money can be earned at one time and spent at another. DIVISION OF LABOUR OR SPECIALIZATION Division of labour is sharing the work. The work is divided among persons and they specialize in doing their part of the process, specialization comes as a part of this. DIVISION OF LABOUR BY PRODUCTDivision of labour by product means people can do what they can do best in exchange for money and then using the money earned to buy the goods and services of others. DIVISION OF LABOUR BY PROCESS Division of labour by process means by organizing production into many stages workers become more specialized in their work and consequently they produce more. ADVANTAGES OF DIVISION OF LABOUR OR SPECIALIZATION * Workers become more expert in their jobs * Jobs become simpler and easier to learn * Output per person increases * Machinery and automation can be used Workers can more easily change jobs * Unit cost are reduced DISADVANTAGES OF DIVISION OF LABOUR OR SPECIALIZATION * Work can be tedious and boring thus resulting in poor worker motivation and the likelihood of a higher rate of absentism * Workers creativity is limited * Greater use of machinery can cause unemployment * Production can easily be stopped by strikes ECONOMIC SYSTEM Economic System refers to the method by which a nation or country plan to utilize its resources in order to achieve economic growth and to benefit its citizens. MAJOR ECONOMIC SYSTEMEvery country is given by an economic system as each system has to decide how to allocate its resources to meet the needs of the citizens. This is a problem because the worlds resources are limited in supply and mans wants are unlimited. The economic is therefore deciding how to best to share these scarce resources. The decision of what to produce or what choices to make from the limited resources available is influenced by the political situation within which the decision is made. In order to share resources all economic must answer to all these problems. PROBLEMS OF ECONOMIC SYSTEM FACE Limited Resources * Man wants are unlimited * Scarcity * How to share resources * Choice / decision No two countries are organized in the same way but they all have to solve three basic problems as follo ws * What should be produced? * How much to produce? * How is it to be produce? * Where is it to be produce? There are four different economic systems which answer the foregoing questions. * Subsistence Economy * Free Market Economy Alternative name Capitalists, Laissez-faire * Controlled Economy Alternative name Collectivists, Communist, Command Control * Mixed SUBSISTENCE ECONOMYA subsistence economy is one where there is little specialization and little trade. In such an economy people tend to live in family groups and grow most of their own food. Free Market Economy In a free market economy there is little or no government interference in the economy. It is based on the private ownership of the factors of production and the means of the distributing goods and services. Market forces are allowed to determine how resources are allocated. Examples of Free Market Economy is Jamaica, and Trinidad and Tobago, United States of America and Hong Kong Advantages of Free market Economy I ndividuals are free to make choices as to what they want to produce, where they who they want to work for, what price they are going to charge for labour and also the price of their finished products * Customers can decide what to produce by influencing market prices * When consumers demands certain goods and services, they send messages to the producers who in turn will produce and meet the demands and thus satisfy the preference of consumers Disadvantages of Free market Economy * It encourages inequalities of wealth The more powerful businesses may buy out the smaller ones thus reducing competition * Wealthy people are more able to purchase and influence the market than smaller ones * Companies may be tempted to restrict supplies to keep prices high Planned / Controlled / Collectivist Economy In a controlled economy all economic decisions are made by the government. The state decides what to produce, how it is to be produced and how it should be allocated to consumers in other wor ds, the state decides what the community needs and therefore demand is not influenced by the consumer.Examples of Controlled economies are Cuba and China. Advantages of Controlled Economy * State control eliminates wasteful competition * The state will provide goods that private enterprise will be unwilling to provide * It is impossible for private monopolies to develop * The state ensures that the needs of the community are met Disadvantages of Controlled Economy * Free enterprise and competition are discouraged * Creativeness and efficiency are not encouraged MIXED ECONOMY Mixed economy is a combination of elements from free economy and a controlled economy.There is a public sector controlled by the government which provides goods and services that the state feels it can manage most efficiently and a private sector in which individuals risk capital in producing goods and services for profit. ADVANTAGES OF MIXED ECONOMY * Individuals have freedom of choice * Government can interven e to protect citizens from unfair monopoly * Both the private and public sector may unite in producing goods. DISADVANTAGES OF MIXED ECONOMY * It is possible for private monopolies to develop Too many government regulations may discourage persons from owning a business GLOBALIZATION Globalization can be seen as the intensification and spread of world wide social, economic, cultural and political relationships among countries. BENEFITS OF GLOBALIZATION * Provision of high quality goods and services at a cheaper rate which is achieved through economies of scale * In contributing to globalization firms not only provide goods and services economically but they also provide employment for people IMPACT OF GLOBALIZATIONThe impact of globalization has some adverse effect on small economies of the Caribbean. Large international firms that can produce high quality goods and services at a cheaper cost set challenges to small firms that are producing similar goods and services PRIMARY PRODUCTI ON Primary Production includes activity which takes the natural resources from the earth, that is the extraction of raw materials and the growing of food. Example Mining, fishing farming and forestry Secondary ProductionSecondary production involves manufacturing, processing and construction which transform raw materials into finish or semi-finished goods. Example baking, ship building and office construction. Tertiary Production Tertiary production includes the provision of serves example Hairdressing. PRIVATE AND PUBLIC SECTOR The private sector is that part of the economy that is owned and controlled by private individuals and firms. Funds for the establishment of private business operation are obtained through * Loans from Bank or Financial Institution * Personal Savings Financing from family and friends The public sector refers to business in the economy that are owned by government for the benefit of the public citizens. The main motive is to provide goods and services to bene fit the country. Funds will mainly com from taxation. Private sector enterprise will involve in manufacturing, mining etc and they are able to produce or provide the services they wish but they must abide by rules and regulation establish by the government, on the other hand, the public sector relies on the private sector for taxation to maintain the operations of the country.In most Caribbean countries we say that there is a mixed economy because some businesses are privately owned and others are owned by the state ADVANTAGES OF PRIVATE SECTOR TO A SOCIETY * Public Sector protects citizens from exploitation by powerful monopolies * Public sector provides employment for many persons * Public sector contributes to the economic lives of the country PUBLIC BUSINESS UNDERTAKINGS Public Corporations These are government or state owned businesses that are primarily run by Central government.Municipal Undertakings These are government owned businesses that are run primarily by the Local Go vernment. These include market, parks and beaches Government Undertakings These departments carry out special functions such as education, health and finance REASONS FOR ESTABLISHING A BUSINESS * To earn a income * To make a profit- which is the result when a firms sales revenue is greater than its total costs. Profit is important because it enables business to survive and grow, it also provides the owner with a return for taking the risk of losing money they have invested. To provide employment to persons in and around the community * To expand production and increase the yearly sales of the firm * To produce a product that is either a good or service to the community * To have the satisfaction of being ones own boss SOLE TRADERSHIP OR SOLE PROPRIETORSHIP The sole tradership or sole proprietorship is defined as a one man business, this is so because he or she enters business on his or her own, therefore bearing the risk of the business and thus entitled to all the profits.Even when the sole trader invites someone else to assist in the running of the business, these individuals would be employees. They do not share in ownership of the business and the owner is responsible for decisions made concerning the business. * Sole tradership is very easy to setup and operate. * It does not require any legal paperwork or registration. * Sole Trader is an unincorporated business, which means that the owner and business are one and same in the eyes of the law. This means that he conducts in his own name, his business is not separate from him. Sole Trader has unlimited liability which means that their personal assets can be clamed to settle the debts of their business that is why in the case of bankruptcy the sole trader stands to lose his/ her personal belongings, if the business assets cannot cover his/her debts. In order to finance the business the sole trader may * Use his personal savings to start the business. * The sole trader may also borrow funds from family membe rs or friends. * The sole trader may also get funds from financial institution such as credit unions, commercial banks or government sources as the business progresses. The sole trader may also reinvest or plough back some of the profits made in the business. The sole Trader may sell ownership of his business to someone else. If he/she dies then the business no longer exists. ADVANTAGES OF SOLE TRADER * The business is simple to start and usually requires only a small amount of capital * Profits are not shared * Decisions are made promptly and the new ideas put in place quickly * The owner retains personal control over the direction and growth of his/her business DISADVANTAGES OF SOLE TRADER It is difficult to access capital if the sole trader wants to expand his business * The sole trader bears all the losses * The sole trader may have to work long hours and may not be able to take vacation when he wants to do so * Unlimited Liability , therefore in the case of bankruptcy he may lo se his personal belongings to claim its debts * There is lack of continuity if the owner dies PARTNERSHIP An ordinary partnership is an association of two to twenty persons who are in business together with a view to earning a profit.This type of partnership may have general or active partners who are involved in the day to day operations of the business. A Sleeping partner is a partner who may be willing to introduce capital into a business but may not wish to take an active part in the running of the business In an ordinary partnership all partners have unlimited liability which means that they stand to lose not only their investment capital but also their personal assets. It is possible to have a limited partnership bit at least one partner mush accept unlimited liability.Partnership is formed amongst partners, partners may share in the management of the business or may serve as the manager or they may employ someone to manage the business Partners are free to decide whatever arr angement they like amongst themselves as to what rules will govern their organization. Partners have a written arrangement or deed. A partnership deed sets out the rights of each partner as to the division of profits. The deed sets out * The name of the business and the date the business started * The type of business and the location of the business Details of each partner * The amount of capital each partner invested * How profits to be shared * The responsibility of each partner in the business In financing a partnership business all partners pool their savings together, loans and retained. Profits are shared by the deed drawn up by the partners, the absence of the deed means that profits are shared equally. In a partnership all partners are held personally responsible for all debts of the business. If one partner cannot fulfill his obligations then the other partner will bear all the losses. A partnership may be terminated When partner or partners decide to sell their share of t he partnership to someone else. When this occurs a new partners are brought in. * If it becomes insolvent or bankrupt * When all parties agree to terminate the business ADVANTAGES OF PARTNERSHIP * It is easy to form as there are few legal formalities * More capital is available to foster growth and development. * Workload can be shared amongst partners DISADVANTAGES OF PARTNERSHIP * If a partner makes a mistake all partners stand to lose * Each partner is liable for the debts of the business * Possible disagreements between partners Membership limit of twenty which restricts resources of the business CO-OPERATIVES A cooperative is a form of business that is owned and controlled by a group of persons who have a common interest and who have an equal say in operation. Types of Cooperatives * Producer Cooperative In this type of cooperative society members are in their business of producing example in a farming community * Buyers Cooperatives This is a type of cooperative in which perso ns who use a particular good in their business operations come together to purchase that good in large quantities and gain benefits of discounts. Financial Cooperatives This is a service oriented society. It brings together persons who have a common interest. The aim is for members to pool their resources in the provision of service * Workers Cooperative Are businesses that are owned and run by their own workforces. Example the crews of a bus company Cooperative is governed by a general meeting. The meeting is held annually and it is at this meeting that a committee is appointed to handle the day to day affairs of the cooperative.The cooperative is controlled by its members. Each member contributes to share capital of the cooperative. Members finance the cooperative through the purchase of shares Shareholders receives dividends if the cooperative makes a profit from its operation. The amount of dividend is related to the number of shares held. Dividends are generally small, since th e major goal is not to make a profit but to provide a service to its members. Earnings from a cooperative are not totally consumed in the payment of dividend.Most of these are ploughed back into the cooperatives to finance operational needs identified by the members. ADVANTAGES OF CO-OPERATIVES * Members benefit from the pooling of funds for the purpose of lending to other members * Members have equal say in the operation of business as well as in the decision making of the cooperatives * Members are the owners of the cooperative society * Employment is created within the organization DISADVANTAGES OF CO-OPERATIVES * Profits may be small or non existent * Shortage or lack of capital may inhibit growth and cause problems